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Galvin v. Excel
Switching Corp., 21 Mass. L. Rep. 233, 2006 Mass. Super.
LEXIS 295
(May 31, 2006) (Garsh, J.). |
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This case concerns the applicable date of
hire for determining when certain employee options
vested. Plaintiffs were employees of RAScom, who became
employees of Excel Switching Corp. (“Excel”) when Excel
acquired RAScom. Plaintiffs alleged that Excel promised
them that their date of hire by RAScom would control the
vesting of options under the Option Agreement at issue.
Excel thereafter was acquired by Lucent Technologies.
Defendants contended that the date of the Excel-RAScom
merger was the “date of hire” by Excel, not the date
when the employees commenced work at RAScom.
The Court held that the plain and
unambiguous terms of the Option Agreement stated that
vesting was determined by the date of employment with
the “Company,” which was defined as Excel. Plaintiffs
attempted to counter this argument with testimony that
they were informed by Excel’s General Counsel in a
meeting that the earlier date would control. The meeting
took place after the “as of,” or effective, date of the
Option Agreement but before any of the Plaintiffs
executed the Option Agreement.
The Court held that the parol evidence rule barred
evidence of the discussions at this meeting, because the
proferred evidence constituted prior or contemporaneous
written or oral agreements to vary or contradict the
terms of an integrated, unambiguous writing.
Plaintiffs argued that the parol evidence
rule did not apply because the meeting at which the
promise was made occurred after the “as of,” or
effective, |
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date of the Option Agreement. The Court
rejected this argument, citing both Massachusetts and
non-Massachusetts law in which a party was permitted to
show the actual date of execution where it was different
from the as of or effective date, provided it did not
alter a vital part of the contract. The Court therefore
awarded Defendants summary judgment on the issue of the
applicable vesting date.
One of the Plaintiffs also argued that he
was entitled to an additional 100,000 shares of stock –
not set forth in the Option Agreement – based on a
promise by Lucent’s General Counsel. Plaintiff argued
that this conversation (which took place after the
execution of the Option Agreement and therefore was not
subject to the parol evidence rule) constituted a
separate agreement or an oral modification of the Option
Agreement. The Court rejected both arguments. As to the
first issue, the Court held that in the face of an
integration clause (stating that the agreement
constituted the entire agreement between the parties),
the alleged oral agreement needed to be a collateral
agreement on a distinct subject, which it was not. On
the latter issue, the Court held that Plaintiff needed
to submit more than his own, self-serving testimony to
overcome the presumption that the integrated and
complete agreement, which required written consent to
modification, expressed the intent of the parties.
This is an informative case for both
corporate attorneys and litigators advising clients on
the enforceability of oral discussions in the face of an
integration clause.
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